Problem
With the transition from the FIT scheme to the new non-FIT scheme, the company was struggling to develop new purchasers (retail electricity providers and consumers) of electricity and develop new sources of financing for capital investment, such as the construction of new power plants.
Solution
Toshiba ESS provided support for selecting retail electricity providers and consumers, and for applying for subsidies to promote consumer-led introduction of solar power generation, establishing a new non-FIT scheme.
Problem
With the transition from the FIT scheme to the new non-FIT scheme, the company was struggling to develop new purchasers (retail electricity providers and consumers) of electricity and develop new sources of financing for capital investment, such as the construction of new power plants.
Solution
Toshiba ESS provided support for selecting retail electricity providers and consumers, and for applying for subsidies to promote consumer-led introduction of solar power generation, establishing a new non-FIT scheme.
Background
A search for new schemes begins in response to the decline in FIT fixed purchase prices and changes in the system
As a power generator, nihon BSL Co., Ltd. (below, nihon BSL) owns its own solar power plant, and had been operating an electricity sales business using the FIT system. Under the FIT, all electricity generated is purchased by power companies for a fixed period of time at a price set by the government. However, having started at 40 yen/kWh at the beginning of the program, the fixed purchase price had been falling year by year. “If the purchase price falls significantly, there is a risk of not being able to recover the cost of constructing the power plant, and the business may become unviable. In fact, when the fixed purchase price fell to 18 yen/kWh in 2018, many companies withdrew from the business of selling solar power.” (Aihei Ryuu, nihon BSL)
It was amid these circumstances that nihon BSL sought a way to maintain the stability of its electricity sales business. This is because the Ministry of Economy, Trade and Industry (METI) had declared a policy of making renewable energy generation a major power source, and the company anticipated that it would continue to implement a variety of measures going forward. This came to pass in FY 2022 with the launch of the FIP scheme. As well as requiring that operators of power plants to which the FIP applies take responsibility for planned value balancing, this scheme introduced a subsidy program to promote the consumer-led introduction of solar power generation. So, how can a business selling electricity through a non-FIT scheme be developed? This was a challenge not only for nihon BSL, but also for the entire renewable energy industry.
Initial Challenges
Developing new purchasers (retail electricity providers and consumers) and new sources of financing
nihon BSL faced two major challenges in pursuing its non-FIT electricity sales business. The first was “who do we sell the electricity we produce to?” (Challenge (1) in the figure). Under the FIT, the electricity generated was purchased by power companies at a price set by the government, so there was no need to worry about who to sell it to. However, with non-FIT schemes, the power generator must find their own purchasers. The second challenge was “raising funds” (Challenge (2) in the figure). Under the FIT, the government’s guarantee of the purchase price made it easy to obtain financing for new power plants, but with non-FIT projects, there was an expectation that the lack of a pre-determined buyer would make this difficult. “To find solutions to these two issues, I attended energy-related exhibitions overseas and conducted in-depth research on policies in various countries. I saw the potential for a scheme to build a group of off-site PPAs in partnership with aggregators, retail electricity providers, and consumers,” (Aihei Ryuu, nihon BSL)
nihon BSL subsequently proposed this scheme to several aggregators and consumers. However, back then in 2021, Japan’s transition from FIT to non-FIT had just begun in earnest, and all companies responded that they were still considering what to do with the structure of their non-FIT projects, so progress was slow. “Toshiba ESS was the only one who put their hand up and said, ‘Let’s do this together.’ Compared to other aggregators, they were by far the fastest in moving toward non-FIT projects.” (Aihei Ryuu, nihon BSL)
Why the Challenges were Overcome
Full support for establishing an off-site PPA scheme and applying for an implementation subsidy
Establishing an off-site PPA framework with nihon BSL as the power producer required finding consumers and retail electricity providers to partner with. Fortunately, the Japanese Consumers’ Co-operative Union (below, the Co-op) showed interest, and we proposed to nihon BSL a business framework in which the Co-op’s subsidiary, Earth Club Co., Ltd. (below, “Earth Club”), would be the retail electricity provider, and the Co-op’s offices and member households across Japan would be the consumers. “The Co-op was an ideal partner for us because of its large national presence and its ability to enter into long-term contracts of ten years.” (Aihei Ryuu, nihon BSL)
The off-site PPA project undertaken by nihon BSL, Earth Club, and Toshiba ESS was selected for the “Subsidy for Promotion of Consumer-led Introduction of Solar Power Generation” in the FY2021 supplementary budget, and nihon BSL received a partial subsidy for the construction of a new solar power plant. The subsidy application process is complicated and time-consuming, and would have been a significant burden for nihon BSL, so as the aggregator, Toshiba ESS also provided comprehensive support for completing the procedures. “With a tight schedule of only a month and a half before the application deadline, we had to communicate with Earth Club and the Co-op on various aspects of the contract and put together the necessary application documents. This allowed us to focus on the construction and maintenance of the new power plant. Looking back, I don’t think our application for the subsidy would have been approved without the support of Toshiba ESS.” (Aihei Ryuu, nihon BSL)
Benefits following Implementation
A press release leads to a five–sixfold increase in inquiries. Sales expected to reach record high
After the partnership between nihon BSL, Earth Club, and Toshiba ESS was finalized, nihon BSL first went to the local Chiba Kogyo Bank for advice on its second challenge: financing. At the time, this was a completely new scheme without precedent, and they expected it would take some time before they received a decision, but they received a loan for the full amount applied for in only about two weeks. “I think the fact that we were able to partner with major players such as Toshiba ESS and the Co-op, that we had a long-term contract of 10 years, and that the government is providing subsidies, were all highly factors that led to the bank viewing us favorably and giving us their trust.” (Aihei Ryuu, nihon BSL)
In addition, after the three companies jointly issued a press release on the partnership, inquiries to nihon BSL regarding its electricity sales business and power plant trading business surged. “We received inquiries from many retail electricity providers and consumers, including major electric power companies, an increase of five to six times the number of inquiries we received before. Given that this was the first scheme of its kind, the impact was quite substantial.” (Aihei Ryuu, nihon BSL) In addition, sales and profits have exceeded what they were when electricity was sold under the FIT system alone. “We expect sales in FY2024 to reach 1.4 to 1.5 times the level of our previous record.” (Aihei Ryuu, nihon BSL)
Feedback from the Customer
Aihei Ryuu, Representative Director, nihon BSL Co., Ltd.
A second project using the same scheme now underway
In terms of future prospects, having established a track record through our partnership with Earth Club and the Co-op, we are now working with Toshiba ESS on a second project based on the same scheme. We have already found a company to buy the electricity we generate, and we have also secured a bank loan for building a new power plant.
We want people to take an interest in renewable energy and see it as something close to home.
We also received invitations from Earth Club and Toshiba Energy Systems to host a tour event of the power plant constructed in this case study. As someone involved in the renewable energy business, I would like to make renewable energy more accessible to as many people as possible in the future, and this is what makes my work so rewarding. If people understand that the renewable electricity produced at the power plant is being used at the local stores where they shop on a daily basis, more people will take an interest in renewable energy and see it as something close to home. I, for one, would be overjoyed if that were to happen.
Company Profile
Company name
nihon BSL Co., Ltd.
Foundation
2014
Representiative
Aihei Ryuu, Representative Director
Headquarter Location
1-2-1 Midorigaoka, Yachiyo City, Chiba Prefecture, Park Tower Yachiyo Midorigaoka 2F
Business Contents
Sale of Solar Power Plant Equipment
Development and Sale of Solar Power Plant Equipment
Solar Power Plant Equipment Consultant
Solutions to this problem
I want to take advantage of the renewable energy subsidy program with an off-site PPA*
We assist businesses that wish to reduce initial costs through the use of subsidies and to improve revenues by engaging in bilateral transactions with retail electricity providers and consumers.
*Subsidy Program for Solar Power Generation Introduced by Consumer
